Metcash excited by private label growth, planning range expansion

Posted by Daniel Palmer on 11th March 2009

Grocery wholesaler Metcash has reported strong private label sales over the past year, providing confidence in their expansion plans.

Speaking during a visit to NSW site facilities, Andrew Reitzer, CEO of Metcash, also informed investors and analysts on Monday that the company was continuing to look for appropriate acquisitions, particularly in the produce wholesale business, and looking to expand their foodservice capabilities.

The company, which supplies IGA supermarkets, purchased prominent Queensland wholesaler and distributor Solomon Food Group recently, among a host of other partial and complete acquisitions in the past year.

Metcash is looking into meat facility purchases as well, in an attempt to improve ‘case ready meat solution’. New concepts are also being developed in other fresh areas, including an agreement with Lenard’s Poultry.

Distribution systems are improving, Mr Reitzer added, enabling them to be able to deliver the full range of products to all independent retailers within 24 hours.

The ASX-listed business reported that expansion of their private label brands continued apace. Black & Gold, their original offering, is growing at 12% per annum and they are hoping to expand the number of SKUs (Stock Keeping Units) to 1,100 by April next year from a current number of 1,003. IGA Signature, a new and more premium option, has 263 SKUs in its launch phase – which began last month – with plans to build this to 600 within three months. They have also launched ‘Field Fresh’ in the past year, which is a range of pre-packed vegetable goods that will expand to fruit and 100 SKUs by October.

Consumer behaviour shifts, which have seen more people dining at home and more Australians travelling domestically instead of internationally, had been a benefit to the business, Mr Reitzer explained. This has helped sales remain robust, while they have also reportedly made market share inroads. In December, they said their share of the Australian grocery industry held steady at 18.8% for the first six months “despite strong competition from the two dominant chains”, meaning they are likely to be edging ever closer to a 20% share.